Share-based payments

9 Months Ended

Sep. 30, 2022

Share based payments:

Share-based payments

2. Share-based payments

2021 Equity Incentive Plan

On August 5, 2021, the Company’s Board of Directors adopted and approved the 2021 Equity Incentive Plan (the 2021 Plan), which authorized the Company to grant up to 1,000,000 Class A ordinary shares in the form of incentive share options, non-qualified share options, share appreciation rights, restricted awards, performance share awards, cash awards and other share awards. The types of share-based awards, including the rights amount, terms, and exercisability provisions of grants are determined by the Company’s Board of Directors.

Restricted Share Units (RSUs)

The Company granted 59,441 RSUs to employees, directors and consultants during the nine month period ended September 30, 2022 (2021: None). The table below shows the number of RSUs granted covering an equal number of the Company’s Class A ordinary shares and the weighted-average grant date fair value of the RSUs granted:

	Number of RSUs			Weighted average Grant date fair value per share
RSUs outstanding December 31, 2020		—		$	—
Granted		57,896		$	12.24
Vested (1)		(15,000	)	$	12.24
Forfeited		—			—
RSUs outstanding December 31, 2021		42,896		$	12.24
Granted		59,441		$	8.51
Vested (1)		(5,853	)	$	—
Forfeited		—			—
RSUs outstanding September 30, 2022		96,484		$	11.43

(1) No ordinary shares were issued in connection with the RSUs that vested during the nine month period ended September 30, 2022 and the year ended December 31, 2021.

The fair value of the RSUs is determined on the date of grant based on the market price of the Company’s ordinary shares on that date. The fair value of RSUs is expensed rateably over the vesting period, which is generally three years for employees and consultants. The total expense recognized related to the RSUs was €0.41 million for the period ended September 30, 2022 (2021: €0.17 million). Total unamortized compensation expense related to the RSUs was €0.47 million as of September 30, 2022, which is expected to be recognized over a remaining average vesting period of 1.9 years as of September 30, 2022.

Share options

On January 3, 2022, the Company announced that under the 2021 Plan, its Board of Directors (the “Board”) approved an award of options for five of its senior managers. With regard to each senior manager, the award is comprised of three elements:

· A grant of an option to purchase 200,000 Class A ordinary shares having an exercise price of $10.50 per share to vest over a three-year period.

· A grant of an option to purchase an additional 200,000 Class A ordinary shares having an exercise price of $10.50 per share to vest once Parent’s share price closed at or above $18.00 during twenty trading days out of any thirty consecutive trading day period.

· Eligibility to receive an option to purchase up to an additional 50,000 Class A ordinary shares having an exercise price equal to the average last sales price of the Class A ordinary shares over the five (5) consecutive trading day period ending on the date of grant, but in no event to be lower than $10.50 per share, for each of calendar years 2022, 2023 and 2024, each to be granted based on individual performance at the discretion of the Compensation Committee of the board of directors.

All options granted will expire on December 31, 2028.

The Company granted 2,128,554 options to employees, directors and consultants during the nine month period ended September 30, 2022 (2021: None).

The fair value of the options granted during the nine month period ended September 30, 2022 were estimated using the Black-Scholes option-pricing model. The inputs for the Black-Scholes model require management’s significant assumptions. The risk-free interest rate was based on a normalized estimate of the 7-year U.S. treasury yield. The Company does not have sufficient company-specific historical and implied volatility information and it therefore estimates its expected share volatility based on historical volatility information of reasonably comparable guideline public companies and itself. The Company expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. Expected dividend yield is based on the fact that the Company has never paid cash dividends and its future ability to pay cash dividends on its shares may be limited by the terms of any future debt or preferred securities. The Company has elected to account for forfeitures as they occur.

The range of assumptions that the Company used to determine the grant date fair value of employee and director options granted were as follows:

	For the 9 months ended September 30, 2022
Volatility	70.91 – 75.32%
Expected term in years	6.92 – 7
Dividend rate	0%
Risk-free interest rate	1.58 – 1.75%
Share price	$5.03 – $9.42
Fair value of option on grant date	$3.31 – $6.18

The table below shows the number of options granted covering an equal number of the Company’s Class A ordinary shares and the weighted-average grant date fair value of the options granted:

	Number of options			Weighted average Grant date fair value per share
Options outstanding December 31, 2021		—			—
Granted		2,128,554		$	5.21
Vested		(64,278	)	$	3.31
Forfeited		—			—
Options outstanding September 30, 2022		2,064,276		$	5.21

There were 2,064,276 unvested employee and director options outstanding as of September 30, 2022. Total expense recognized related to the employee and director share options was €2.22 million for the period ended September 30, 2022. Total unamortized compensation expense related to employee and director share options was €9.01 million as of September 30, 2022, expected to be recognized over a remaining weighted average vesting period of 2.92 years as of September 30, 2022.

Incentive shares

As part of their compensation package, the non-executive directors that were appointed in December 2020 were granted 5,000 shares for each year of service to the Company.

	Number of shares			Weighted average Grant date fair value per share
Incentive shares outstanding December 31, 2021		30,000		$	23
Granted		—		$	—
Vested		—		$	—
Forfeited		(25,000	)	$	—
Incentive shares outstanding September 30, 2022		5,000		$	23

The above shares vest at the discretion of the board of directors. In exchange for the share options that were granted above, the holders of the incentive shares agreed to forfeit their rights to incentive shares relating to years two and three of their tenure as a non-executive director. The total expense for these shares recognized in the nine month periods ended September 30, 2021 and 2021 was €0.26 million and €0, respectively.

As of September 30, 2022, there was no unrecognized share-based payment expense related to the incentive shares. The shares have been recorded at their fair value at September 30, 2022.

Reconciliation to statement of profit or loss

€’000	2022		2021
2020 Earn-Out		—		4,730
RSUs		412		—
Incentive shares		—		166
Options		2,221		—
Share-based payment expense		2,633		4,896